UPDATE 2-Indonesia stock exchange CEO resigns after $80 billion market rout

The head of Indonesia Stock Exchange resigned on Friday after index provider MSCI flagged a possible downgrade to "frontier" market status, triggering a more than $80 ‌billion market rout.

The benchmark Jakarta Composite Index was trading flat a day after authorities announced measures to address MSCI's concerns and ease investor worries. It dropped more than 8% on Wednesday and ⁠Thursday, its steepest two-day fall since April. The rupiah was last at 16,800 to the U.S. dollar having set a record low of 16,985 last week.

Iman Rachman announced his resignation as CEO on television, saying he was taking responsibility for the situation. "I hope this is the ​best decision for the capital market. May my resignation lead to improvements in our capital market," he said. "Hopefully, the index, ‍which opened positively this morning, will continue to improve in the coming days."

Someone had to take responsibility, said Mohit Mirpuri, portfolio manager at SGMC Capital in Singapore. "The bigger picture is a reset and an opportunity for the exchange to emerge stronger with clearer standards and governance," Mirpuri said.

The selloff came after MSCI raised ⁠concern on ‌Wednesday about share ownership and trading ⁠transparency, saying the market risked a downgrade to frontier status if it did not improve. Foreign capital outflows have increased due to concern about how President Prabowo Subianto ‍is widening the fiscal deficit and expanding state involvement in financial markets.

The appointment of his nephew Thomas Djiwandono to the central bank this month ​and firing of respected finance minister Sri Mulyani Indrawati last year have shaken confidence in Prabowo's stewardship. Some of the improvement ⁠measures proposed on Thursday included doubling the free float requirement to 15% and checking the affiliation of shareholders with ownership of less than 5%.

Regulators said communication with MSCI ⁠has been positive and that they were awaiting a response to the measures which they hoped to implement soon. Their response appears to have allayed investor concern but sentiment remains fragile.

"Policymakers want to fix this," said Paul Dmitriev, senior analyst and co-portfolio manager at ⁠Global X ETFs. "The government has every incentive to fix these issues as systemic outflows would be substantial and could materially impact the market." Foreign ⁠investors sold around a net $645 ‌million worth of shares in the two-day selloff, exchange data showed. They sold $1 billion worth of shares in 2025.

($1 = 16,780.0000 rupiah)